This week I want to explain why I think wealth creation is on trend…
You see, there are things happening in modern society that are forcing you to think about money and wealth creation differently to your parents and their parents.
And it is my desire to inspire you to take action to improve your personal situation and guide you to your personal definition of financial freedom…
Retirement Planning – I’ll get to that later!!
If you are like most people, right now you are probably not thinking about planning for your retirement, unless of course it is something that is just around the corner for you.
And this is a problem…
How you are supported in retirement will not be the same as it was for your parents or grandparents.
There is a proliferation of websites and company’s promoting calculators that tell you how much you are going to need to retire.
One of the keys to these calculators is the age you plan to retire…
But the reality of retirement is changing, and it is no longer about the age you are going to retire, but instead the amount of income you are going to need to retire.
This is where it gets interesting…
There are two factors that are crucial to how you decide your retirement plans…
#1 Life Expectancy
We are living longer…
Due to advances in medical care and better diets and exercise, life expectancy is increasing. In most western countries you can now expect to live into your 80’s.
So with a longer life expectancy, you now need more wealth and money for retirement. Where will that money come from?
Let me be a little obvious here and suggest, it will come from your wealth creation plans. Thanks captain obvious 🙂
#2 The uncertain future of welfare
Again, in most western countries governments are implementing legislation to encourage you to save for your retirement.
In Australia its superannuation and in the USA its 401(k)’, in Canada its RRSPs.
The simple truth of these programs is that governments needed to do something when they realised that the demand on welfare would exceed government’s ability to fund the payments.
The baby boomer generation is starting to retire at a faster rate than the younger generation are entering the workforce.
This results in a shrinking amount of tax being collected by governments and reducing their capacity to fund sufficient welfare payments.
So the onus is shifting away from welfare and toward self-funded retirement.
Like you, I want to have the ability to make choices in life that meet my dreams and goals.
And I want to be able to do them when I want…
The thing about this ‘want’ is it takes money to have these lifestyle choices.
So again, where does this money come from… yep you guessed it, your wealth creation plans.
Wealth creation and stress might sound like they fit nicely together, I get that for some people one leads to the other…
But what I am getting at here is the desire of more and more people, just like you, who want to take matters into their own hands and reduce the stress in their life.
Everybody knows that money is one of the most significant contributors to stress in life, relationships and families.
To avoid money being a stress in life, there are more and more people taking action to understand wealth creation and how they can use it to reduce stress in their life.
This is obviously leading to more opportunities…
And in a world of instant access to information, a lot of material to assist you is available on the internet, social media and traditional media.
Inspiration to Action
Now there is likely to be at least one of the above factors that you can relate to, whether it is retirement planning, lifestyle choices or stress minimisation.
I am certain you will agree that each of these are compelling reasons to take action, and start the wealth creation journey. But what will it take to get you moving?
Let’s take a look at the cost of procrastination or inaction…
If your aim is to have $1,000,000 by the age of 65, how much do you need to save each month?
…and I choose this number because it is the most common amount people give when asking how much they need to be wealthy.
If you start at age 25, you need to save $353 per month if you assume an annual return of 7.27 percent, which is a historically achievable return for wealth creation purposes.
Start at age 35, you need to save $777…
If you start at age 45, you need to save $1,857…
And if you start at age 55, you need to save $5,692…
These are quite alarming numbers, I mean it’s fairly obvious that saving $353 a month is going to be a lot easier than $5,692 per month.
That is not to say it is easy, but the simple maths of these numbers suggest putting wealth creation off is not making it any easier for you.
Time Value of Money
The other important lesson from the example above is the time value of money.
What does this mean?
Well let’s say that you and I agree to save $4,000 per annum until we are 65.
You start at age 25 and I start at age 35.
You will make an extra $40,000 in contributions to your plan, but the real value of this lesson is what that represents at age 65.
Well the scary or exciting news, depending on where you sit in this equation, is that your $4,000 annual contribution will have grown to $949,880, using the same 7.27 percent return and assuming funds are re-invested each year.
On the other hand, my $4,000 per annum will have grown to $431,560…
That is a difference of $518,320!!!!
From this example, you could say that the cost of procrastination is half a million dollars.
Does that make you want to take some action TODAY!
Time can be your friend or enemy, you get to decide.
Wealth Creation – The Way Forward
You now have a view of why I think wealth creation is on trend…
You would be wise to choose what will motivate you to action. Will it be the fear of not having enough in your retirement, or…
The desire to fund your life choices, your dreams and goals, or
To reduce the stress of not having enough now for you and your family, or
Will it be your desire to contribute to a cause of your choice?
And just remember, procrastination will have a dramatic effect on your outcomes.
Wealth creation is on trend, jump on board and start your journey TODAY.